Apple’s electric car plans driven out by AI

Apple cedes electric cars to Tesla and its ilk.
29 February 2024

• The Apple electric car destined never to hit roads.
• In truth, no one ever asked for an Apple electric car, and its projected price-point was absurd.
• Apple will now focus on generative AI.

Anyone remember that Apple electric car idea? One of the company’s most ambitious projects has finally been canned, much to the surprise of some 2000 employees working on it. The effort has been decades long but an internal announcement on Tuesday finally put the project to bed.

Chief operating officer Jeff Williams and vice president in charge of the electric car effort, Kevin Lynch, informed employees – who have remained anonymous given that the information isn’t yet public – that the project will begin winding down and staff shifted to the artificial intelligence division.

The Apple electric car team was known as the Special Projects Group (SPG). Given the scale of AI hype, it’s no wonder that team is growing under executive John Giannandrea. AI projects are an increasingly key priority at Apple and, let’s face it, there weren’t many people still holding out for an Apple car.

Work on the idea began in 2014, the multi-billion-dollar effort called Project Titan would have catapulted Apple into a whole new industry. At its conception, the Apple electric car would have a limousine-style interior and voice-controlled navigation.

The project was never smooth sailing – at all. The team’s leadership and strategy was changed several times: Lynch and Williams only took the reins a few years ago, following the departure of Doug Field, who’s now a senior executive at Ford.

Publicly, Apple contemplated many designs. You could almost be forgiven for thinking that this was a major issue for the company in realizing its electric vehicle, but self-driving technology was also a concern. Apple began road-testing its system in 2017 with dozens of vehicles on US roads – all inside the interior of a Lexus SUV.

The ultimately ill-fated Apple electric car.

The Apple car system gets tested in an SUV shell. Via the Financial Times.

Just one month ago, it was reported that the Apple electric car project had reached a make-or-break point. More secretive components were tested on a track in Phoenix – the latest internal strategy had been to delay the car’s release until 2028 and reduce its self-driving specifications from Level 4 to Level 2+ technology.

One idea, scrapped earlier than the whole project, was a car with no steering wheel or pedals. Time also went into the development of a remote command center that could take over for a driver. The SPG included employees from across the car industry, with designers from Aston Martin, Lamborghini, BMW and Porsche.

The car had been imagined at a cost of $100,000 but executives worried the vehicle wouldn’t achieve the profit margins Apple typically enjoys on its other products. There were also concerns from the board about spending millions of dollars every year on a project that might never be realized.

The move is a relief to investors, who sent Apple shares up on Tuesday after the news broke. Elon Musk has also celebrated the move – less competition for his Tesla – in typically graceless fashion, by posting a saluting emoji and a cigarette emoji on his platform X. If only there were a good verb for posting to what used to be Twitter.

The Apple electric car died to the sound of laughter across the internet.

Oh stop, our sides are splitting…

The move from Apple may just reflect the cooling of the EV market. Sales growth has wavered thanks to high prices and poor charging infrastructure discouraging mainstream buyers. Not that any new Apple product is viable for the mainstream buyer when it’s first released…

Still, the entire EV industry is pivoting, with General Motors and Ford shifting their attention to hybrid vehicles thanks to a lack of EV demand and too many manufacturing bottlenecks. Across the industry, automakers are slashing battery-electric car prices, production targets and – crucially for Apple – profit forecasts.

Apple is still heavily investing in other areas: it has spent $113 billion on research and development over the past five years with an average annual growth rate of 16%. Of course, it also launched the Vision Pro headset, its first new product category in almost a decade, with remarkable – not to say baffling – success.

Ultimately, focusing on AI may be a better bet, Bloomberg Intelligence analysts Anurag Rana and Andrew Girard said in a note. “Apple’s decision to abandon electric cars and shift resources toward generative AI is a good strategic move, we believe, given the long-term profitability potential of AI revenue streams versus cars.”

Ultimately, then, the Apple electric car isn’t a huge loss, but it does prove that the technology industry is increasingly making cuts in other major project areas to keep up with AI development.